members of congress better condition the markets and the public for something more traumatic. people's lives and jobs and retirement funds. >> thank you for being with us this morning. dave, you are headed to washington. let us know what's happening. >> he's going to fix it. >> we're going to have pizza. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ led zeppelin to wash away monday blues. congrats to the band for winning kennedy center honors last night. welcome to "squawk on the street." i'm carl quintanilla along with jim cramer, david faber live at nyse. melissa will join us in the next hour. we're kicking off the month of december with strength. anticipating good auto numbers today. greece unveiling that $10 billion eurobond buyback.

a 52-week high in france and germany. our road map this morning begins in washington where fiscal cliff negotiations according to the "times" has "collapsed." at least for now. with less than a month until the deadline, who blinks first if anyone? >> goldman takes dell from a strength to a buy. is it time to look at the stock and maybe even other players in the beat up personal computer sector? >> manufacturing data out of china. not bad. 50.6. that's the highest in seven months. although shanghai again trades lower even europe's pmi improves a touch in november. first up, we're one month away from the fiscal cliff and so far the white house and congressional republicans are still in disagreement over how to reduce the deficit and avoid a raft of tax hikes and spending cuts. yesterday our own jim cramer and maria bartiromo were on "meet the press" and cramer had a message for fellow panelists and father of the anti-tax pledge,

grover norquist. >> most ceos are republican. they're on board. they're not on board with you. they're not on board with you because they fear your view. they think you do not favor going -- you favor going over the cliff. that's what they think. they think that you favor -- >> just for the record since we're on tv. that's silly if they think that they shouldn't be ceos. >> it doesn't really matter. that's what they think. >> i want you to walk me up to that moment. >> behind the record. i like that too. >> i'm stuck. like grover is stuck with this pledge he made everybody take which is that they have to go over the cliff because they obviously will not ever say the word tax. they will only say revenue. i'm stuck speaking to many more ceos than grover norquist is. he thinks it's silly. he thinks ceos are silly. i don't think they're silly. they control hiring in this country. many americans play for dinner. i don't think grover norquist cares about who is paying to

dinner. he has a pledge. it's important to him and important to the people who agreed to it. i worry about dinner for people. i worry about rising above and dinner for people. he won't surprise it. ceos do. he has his principles. i went to college with him. he's a very nice man. very nice. >> you have a history. we should keep that in mind. >> sweet guy. likes the cliff. wants to jump over. favors recession. that's how i read that. recession isn't bad thing if you're a short seller. if you can go short, you can get your way. it could be big. >> it could be. >> it could be huge. you never know. >> at least for some period of time. >> yeah. >> there is a big analysis on the cover of "times" about talks as they stand right now. they say the president has been burned, scarred is the word they used by the previous negotiations and that until republicans put a new plan on the table, he will not move. he will not change what he's put on the table as of last week. is that compromise? >> i think that he's asking the

republicans to say what cuts they would make. the republicans to me have not put anything forward that i see. i know that even when you say something like that, that becomes political. i think one of the things that's really important is that the republicans who do agree to raise taxes will be targeted by norquist. norquist far more powerful than karl rove and fox news. >> you do believe that? >> much more. he could destroy any republican who goes against the pledge. he's really powerful. i have known grover for years. >> even though democrats won the presidential election? doesn't that change the calculus? >> he would say these people are all safe seats if they don't get against the pledge. norquist has the division so to speak. he could destroy any republican who says the word tax increase. has he said -- he said if they're seduced by democrats in

pure thoughts this is the so-called i can smell pornography when i see it. this is pornography for grover norquist. he can smell it when he sees it. he will target. he will destroy republicans who go against the pledge. he's much more powerful than any individual republican. and individual ceo. let's just face it. i've always felt he was the most powerful person in the class of '76 at harvard. enjoyed his success because he was a fellow member of the harvard crimson. i just disagree with him. terrific guy. >> with friends like that -- >> with all due respect to my ex-partner larry kudlow with all due respect. >> the treasury secretary talks about how he does not think that in the end the gop is going to prevent tax rates on the wealthiest from rising. this is what he said. >> what we're trying to do is make it more likely we come together on a good agreement for

the american people that extends tax cuts for the middle class, brings our long-term deficits down. tough spending savings as part of that and invest in things that matter to the american economy. we think we can do that. we have a good chance to do it now. it's important that we do it. i think we're going to get there. >> given tough talk over the weekend, why aren't we waking up to down numbers, red arrows? >> europe is terrific. bond rates are phenomenal. a great run. china numbers are better. i think that there's a lot of people who feel like doug cast does who writes with me with a piece in "the new york times" saying that -- >> most stuff is nontaxable accounts any way. most stocks that people won't be as motivated to sell as people think. of course that doesn't necessarily deal with the increase in payroll taxes and the whole recession side of it. it does deal with the stock market side in terms of selling.

>> why not say, listen, fiscal cliff, i have to cut numbers. i have to cut guidance. i think many ceos will cut guidance because of the possibility that the amt is going to -- this alternative minimum tax, people don't know they have to write a check for $3,500 at the end of the year. once you jump over the cliff, you can reverse the payroll tax. senator corker who is terrific and had good privilege of talking with him this weekend, we both know you can't reverse amt. once you go over the cliff, amt is insidious. it's hard to figure out. >> in terms of negotiations we will sit here day after day, is it more theatrics, are they really stalled, will we get down to something at the end of the day that doesn't deal with everything, doesn't deal with fundamental tax reform but in terms of taxes and spending and put other issues into 2013? don't you think a lot of it is

theatrics. >> i feel that if you vote -- if you can't utter the word increase next to the word tax, which is somehow many republicans can't put that sin tax -- >> you just need enough of them to do that. >> that's a good point. grover norquist my friend from college emphasizes that if we put cspan cameras in, we would find out the negotiation. we put cspan cameras in and you could target republicans that want compromise. compromise is enemy for republicans that signed the pledge. compromise is the devil. i'm a big believer in compromise like lincoln had to do to get that emancipation proclamation thing. that's not included with grover norquist. nice guy. >> your terrific friend. you love him. i just wanted to add that for you. >> harvard crimson, forged friendship. you don't get that kind of

friendship just in every day life. more of an acquaintance. maybe that's a better word. acquaintance. >> all right. let's move onto dell. shares are rising in premarket. goldman sachs upgrading to a buy from a sell. take note of that. full upgrade like that. it says dell's net cash levels provide an opportunity for a leveraged buyout or recapitalization. you hear the argument often times as a way to focus investors on something that's cheap. because it's a way for you to say, wait a second, how much cash do they have? you know, he does own 14% of the stock. what are opportunities here in terms of free cash flow and yield? i tend to think these arguments do usually focus investors on cheapness relative to free cash flow, relative to cash on hand. unlikely. highly unlikely that dell is going to be a lbo.

we've had two guys over the last couple months saying we can do a 50 billion lbo and equity check is maintained at not that large a level, you never know. >> why does goldman use the term lbo in its upgrade? >> i argue it's just another way of showing how cheap it is. >> theater. >> more theater than they really believe this is going to happen. >> certainly not the top bullet on their note. top bullet is long-term concerns are now mainstream thought net cash position is decent, right? >> yes. >> they would have to get a lot of cashes from overseas by the way. you hear cash at u.s. corporations, a lot of it is overseas. repatriation tax holiday is not part of any negotiations we've been hearing about. >> not at all. >> an area that's a no go. so that is an important part of the calculation. if you can't bring that cash back and goldman says this. this is not something they think is going to happen.

>> do you remember when steve brought seagate private. it was brimming with cash. raised the dividend next week. why doesn't michael dell pay out a special dividend and everyone is thrilled. >> fundamentals are still what? >> fundamentals are -- i mean, look. fundamentals depend upon a belief that the personal computer is going to be with us for a long time and is not that much in decline. ipad will not crush it. i don't know. >> why not redistrict some of that free cash flow and that cash into an area where you think you can attain real growth. try to recreate the company in some sort of significant way. >> i think that -- >> it's not easy to do that by the way. >> as rivals have discovered. >> maybe you want them to go into the pharmaceutical business. allerg allergen's weight loss business is for sale. not a lot of synergy there. you can't find growth in the personal computer business.

it doesn't exist. >> maybe you could figure -- you'll carry it around on your ipad, maybe there's more synergy than you think. >> maybe he should take the cash and buy a lot of apple stock. >> i tell you why that's not going to happen. we're going to enter the new month for the markets after a mixed november that stocks saw the nasdaq and s&p finish on the plus side. dow posting second consecutive monthly loss. futures on the rise this morning helped by china pmi for november showed expansion for the first time since october of '11. wall street is waiting for ism manufacturing numbers due out in less than an hour from now. smallest change in november for the s&p, jim, since march. smallest in either direction. four points. >> you want the best december in the world, no vacation without legislation. we get legislation in december. we're going to break out. no vacation without legislation. that's my new watch word. do you like it?

>> i do. maybe on a billboard even. >> december is historically strong. >> i know. that's what makes me think something has to happen. >> by when? if recent history is precedent, you would get a deal if you're going to get a deal at all around the 21st. right before the holiday. >> they're on vacation. legislate before you can vacate. a twist. >> i get it. i think it's good. >> then we have december to remember to quote an ad that we hear every year around this time. >> all right. you mentioned the special dividends. you have hca and dish and cato. cato mentioning the cliff as motive for the move. >> no way that tim geithner is ever going to let that dividend tax rate stay the same. that's a done deal. the president does not like dividends being taxed at a low level. they just have it in for dividends. not crazy about that.

>> wealth disparity. things like that. mitt romney's tax rate. those come up in that argument. listen, it may be certainly they wanted to do it before the end of the year. this having been a leverage buyout, they like to keep their leverage ratio pretty high. 4.5 times. then they generate cash flow and pay it down and go to capital markets and borrow another billion dollars and they pay two more dollars to their holders who continue to be some of the lbo firms that took it private. >> that's a game plan that works. >> it has worked well. >> rates are so low. why doesn't everybody do that? >> works well. as a former fully owned by private equity they are more comfortable with leverage than others are. >> a level of comfort that i find to be -- they are insensitive to the economy and they're a winner in obama care. 2014 begins and i'm picking numbers up. hca. even with this leverage.

raising numbers, hca, 2014. i'm doing that right now. cramer firm is taking up numbers. >> you did it in your head. >> i did. i'm going to ask the sales force to go out with it and i think he can get the stock moving and by the end of the day i'll let retail investors know and they'll take institutions out -- >> wait until tomorrow. >> delay is better. don't make the call yet. >> that works well. >> hedge fund cliff. >> line two for you. >> when we come back this morning, the key to averting the fiscal cliff could come from a bipartisan group of senators called gang of eight. mark warner is coming here to post 9. one more look at futures. more "squawk on the street" is back after a break. if we want e our schools... ... what should we invest in? maybe new buildings? what about updated equipment?

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♪ candle is burning low ♪ lots of mistletoe ♪ lots of snow and ice everywhere we go ♪ >> a bright spot for one u.s. car maker. chrysler says the u.s. sales up 14% last month. that's best month since 2007. sales were up over 32% from last year. we'll get gm at 10:00. we're talking 4 1/2 to 5-year

highs for all these guys. >> you have a combination of 11 year old age of autos, destruction of -- by the way, sandy was an auto destroyer. loss of life. horrible. terrible. it also took out many more cars than people realize. you have to pump overtime to be meet the demand. >> we're still adding up sandy and figuring that out. we're far from figuring that out. hundreds of thousands of automobiles. where are we? 15 plus at the end? >> it's possible. 15. it puts people to work in the country. they don't just add in mexico. mexico is booming. fabulous moment for mexico. they will add in this country too. >> there's talk that their share of the market in the northeast, the big three, is not as high as it is in the rest of the country. we live in part of the country where incomes are higher. you may see better numbers out of bmws and mercedes.

>> i don't know the percentage that's brought into the new jersey, new york area, the ones that you always see when you go over a bridge and you look down and this is new york -- i don't mean to be too centric. the foreign cars have to replenish quickly. american cars have to be put on a trailer and take them here. >> again, those numbers coming out later on and we expect them to be good. in addition to ism which comes out at 10:00, which will be a market mover for sure. when we come back this morning, get ready for a special dividend called cramer's mad dash payable to shareholders of record today. we'll hear what jim has to say and if it can pay out for you and later, jpmorgan chief u.s. economist, michael feroli. futures up 60. back in a minute. [ male announcer ] at scottrade,

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♪ >> seven minutes until the bell. let's get cramer's mad dash on this monday morning. first trading day of december. jim, people are watching apple because the 50% retracement of the correction is at 605. so we might test that level. >> i think it can get there. one of the best pieces i read about apple in ages yesterday "the washington post" about apple. what is tim cook doing? here they are talking about breakout products coming. they are talking about much better sales for imac which some

are assembled in the united states. ipad mini off the charts. this piece says the stock should go higher. i urge everyone to read it. it's very contrary to conventional view about what's happening under tim cook's regime. >> and they take the forecast for december up to 47.5. >> china hasn't really kicked off there. i know there's a percentage that says samsung game, set, match overseas. this piece says apple just getting started overseas particularly china. very positive. >> we remember 505. you think those days are over? >> we hit 505 and then you have one of these things. now, what i want to emphasize is i think they are having a great holiday season. a terrific piece on another network on bloomberg where i heard a major retail seller saying the apple is blowing out. this is big. europe has been weak. >> all right. finally, a call on apple and takes rimm to a sell. they say the blackberry 10 is a

better user experience and will not turnaround the long-term problems. >> i thought that was interesting. carriers won't get behind it. stock has had a monster run. you know what? i agree with this call. enough is enough. >> it has been a lot that's for sure. when we come back, can the bipartisan gang of eight, the senators, flex enough muscles to strike a deal that would help avoid the cliff. we'll talk to democrat mark warner of virginia and ford will release sales for november at 9:35. can they rebound after sandy hurt demand in late october? we'll have the answer to that question plus the first trading action of the new month after the opening bell in just a moment. [ male announcer ] this is steve.

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or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell set to ring in just under two minutes or so. if you want to play the history game looking at the history of the month of december for the markets, some call it meaningless but it is basically the second best month of the year after april. 23 of the past 28 decembers have been up. average of 1.5%. since '90, up 2%. not an insignificant -- santa

claus is for real many times. >> many of us have to commit. we're not allowed to own individual stocks but it's uniform gift to minors time. you have to make a contribution. i don't know whether you guys do it. it's a great way to put money away for your kids. that contribution is due now. there are a lot of contributions that are due that you remember to put money to work. in an environment where not people put money to work and people aren't doing anything, you get an influx of retail money. you have to commit that money to your retirement and to your kids. >> interesting. >> it's a big difference. >> btig has a note on seasonality regarding the end of the year and even december '08 was positive. how resilient the month of december is. >> funny you mention that. that was such a false tell. we thought maybe things had bottomed and then just off a cliff, not fiscal but stock right after that. it's a great note. >> meantime, as we await the

opening bell this morning, we'll look at the s&p 500 at the realtime exchange on the top of your screen. big board here. >> there's the bell over at the nasdaq today, sears holdings and st. jude's children's research hospital celebrating the st. jude thanks and giving campaign. lead story involves delta and talks they say to acquire from singapore some stakes in virgin atlanta. >> we'll see what happens. they have been active. the one people are more focused on is american airlines in bankruptcy. us air negotiating with creditors. 70% ownership. we'll see. let's see where we end up on

that one when it comes to consolidation. what's been interesting of course in terms of airlines and what you hear consistently from those who follow them and invest in them is they have not increased capacity therefore they have more pricing and you are seeing signs of real cash flow. can you believe it? >> it's a new thing. >> will that continue is one key question. >> read a piece this morning about people liking the dreamliner. to go back on delta for a second, i understand amr is more important. delta seems to be doing different things. is delta being creative with a group that's been the least creative sector i've ever seen? >> they may be. they are trying to take control of certain things it seems. you point out refineries. that was interesting. kate kelly reporting on that for us many times. you need to be somewhat creative. the overall theme in airlines continues to be there's not another guy coming along that cuts prices, increases capacity and sends the industry back that

it's never been able to earn its cost of capital. we'll see. >> you can't get -- let's tell the truth. you can't get a seat. >> certainly at least this year they are no longer the inverse of what crude is doing. >> that's a good point. >> look, oil is not doing that well. and oil in the united states not doing that well. one reason i thought dell was brilliant to buy a refinery, oil in the united states is decoupling from the rest of the world. maybe delta will have a price advantage over the other guys. creative thinking. >> we'll keep an eye on that one. headlines out of news corp today. after all of the attention paid to this thing called the daily, they're going to kill it. bold experiment but not profitable. >> they were early there in china creating an ipad focused

publication. it hasn't worked out. as for thompson, he was odds on choice to run the publishing spin. it won't happen for a while. let's not forget news corp and a large part of that move up that you see there is a result of announcement of that split which took place earlier this year. split itself will not be effective until the third quarter of it year. you will deal with slow growth perhaps dividend payer or nongrowth publishing parts of the company and then its broadcast assets with more growth. >> my charitable trust owns this trust. we saw the ford number. i don't know if that's enough to get it rolling. there's a lot of people that like ford here. >> on those ford numbers we'll go to phil lebeau who is watching all of the auto sales today. good morning, phil. >> month of november 6.5%. that's above the estimate that was out on the street of an

increase of 3%. we're trying to see a breakdown in terms of trucks versus cars. remember, trucks is part of the story that we're looking at for the automakers. in the month of november coming off of october, increase in housing starts, increase of activity with contractors, construction firms, we're expecting to see trucks do better. we're waiting to see final numbers from ford. increase of 6.5% versus estimate of 3%. gm numbers top of the hour and we'll talk to the head of gm u.s. >> you can build a portfolio that had usgs and depots and some trucks, right? some autos. >> yes. look. this number is spectacular. if you had an inkling that europe was getting better a bit, ford is a $15 stock. >> funny you mention that. jim o'neil of goldman on "squawk" saying i know of

investors in europe who haven't dreamt of that in years. you made a point to a large degree that's where some money is going quickly. >> a lot of money. i had bill mcdermott co-ceo of s.a.p. on "mad money" on friday. best third quarter. fourth quarter could be increedable. europe getting better. even better for them. kind of remarkable. >> merkel has given interviews saying that a debt write-off is feasible down the line. that's key coming from her. >> reached a deal last night. >> not to mention bond buyback from greece today. that's a short-term pop. >> anyone who is fearless enough to wade into greek dead a greer later -- not even a year -- feeling much, much better. even today the yield falling dramatically as a result of those headlines you just discussed, carl. >> italian bonds, spanish bonds, greek bonds, best performing assets versus dell, versus hewlett.

even if you say he's right about anything, they skewer you. >> you look at the period when yields were far higher. >> yes. he would have made a killing. >> you saw a picture of him today in the post or daily news walking around east hampton, long island. >> how does his hair look? he uses the same barber as i do. >> he had a hat on. >> i lost my hat on at the cnbc party. i bought it at jcpenney. $24. terrific. trying to help jcpenney monthly sales. i did buy the hat there. mid town store, david, you want to go by with me sometime. we can get a pair of trousers and a hat for 38 bucks. >> add a cup of coffee and a hot dog. >> while we use the word trousers, bob pisani is here watching what's good morning, bob. >> happy monday, everybody. did you notice the market.

nice rally here. again, the market is demonstrated that it believes a deal on the fiscal cliff is coming. i know. i didn't hear it over the weekend. headline risk was all anybody wanted to talk about on friday. if anybody says that a deal is not happening or it's going nowhere, we could wake up down 15 points on the s&p on monday. guess what? boehner said the deal is going nowhere. now, when i call the bulls on this, they say, bob, they didn't say a deal was off. they just said so far the negotiations are going nowhere. the market still believes that a deal is coming and it's going to be a substantive deal. instead and by the way, geithner insisted on tax rates issues. looks like there may be something happening eventually. we didn't fall apart on the whole thing. even futures weren't down overnight. instead we rally on a little bit overnight on the greek deal and for those that don't know and this is arcane depending on what kind of bonds you're talking about, the bonds that they are offering are priced well above what anybody was expecting. that's one of the reasons that greece is moving up and we're seeing moves up in europe

overall. the greek ten-year yields dropped 9%. they're now about 14% yield. lowest since april of 2011. we saw 1% to 2% rises in europe right now. the main german market, the french stock market, they're at 52-week highs. germany is at a 52-week high. france at a 52-week high right now. euro at six or seven-week high so far. europe is moving things. not the united states. spain also by the way we didn't talk about this they officially asked for european funds to recapitalize their banking sectors. that's also a bit of good news. i want to talk about china because i got a lot of calls and questions about my comments last week on china. have you noticed we got good news on the manufacturing overnight on china. better than expected. november better than expected. the pmi numbers. guess the whole world went up. korea went up. everything went up except china. a lot of comments last week about what exactly is happening in china because china --

mainland china stock market is among of the worst performers for the whole year. we're down 11% in shanghai this year. hong kong is up 18%. how do you explain this? this was a huge debate in the last couple of weeks and of course a lot of people are@@ pointing to the fact that there's less stimulus than expected coming from the government. they haven't said anything but that's not the problem. this has been going on now for months and months on end. selling shanghai and buying into hong kong. there's a couple problems. number one, shanghai is completely domestic market. let's face it. less sophisticated investors and too many shares of shanghai stocks out there. the owners of these stocks have flooded the market, carl, in the last couple of years with too many shares. so there are way too many shares of these stocks on the market and this constant calls to buyback stocks from mainland china. the important thing here is hong kong is an international market. international investors can get in on that deal. that's why i think -- i don't

know how jim feels about this. if you ask who is right shanghai or hong kong, i would go more with hong kong outlook than shanghai outlook. >> totally agree. great report. >> i want to get back to phil lebeau on ford. brought us numbers but now predictions on production next year. >> the key here is production drives revenue which drives earnings and this is important news from ford in the first quarter of next year it is now scheduling production of 750,000 vehicles. that is an 11% increase compared to the first quarter of last year about 73,000 vehicles. just for some perspective of how production is increasing, this quarter ford projects it will build 725,000 vehicles here in north america. they are increasing it by another 25,000 next quarter. and one other thing, carl, when we talked about importance of trucks. in november, ford had its best month for the f series since november of 2005 selling 56,000 f series trucks.

that's an 18% increase compared to last year. you are really seeing the momentum building in terms of production in truck sales. >> yeah. up a fifth on f series. thank you very much. significant number. >> i bought my f series last year. great car. great job. f-350. not diesel. >> where do you keep that? >> it's part of our inn complex. >> got it. >> i assume we think gm might be good? 20 minute >> i think so. >> let's go to rick santelli in chicago. >> if you want to find out what's going on in the states, bob pisani is very accurately discussed, you have to look toward europe. so let's look toward europe. let's look at 24-hour charts. let's look at a 24-hour chart of the euro currency. started to do much better. you throw up the bund.

many areas whether you talk italy or indeed greece, rates are moving down. that isn't a bad thing for funding but it does ehave peopl look at spain saying they'll do bank bailout, old program, not country bailout new program. the correction was small. goldman says stocks are the place to be. kind of making this trade a little more true than it was on its knee jerk. if you look at putting it together. you can see we're up several basis points. still not huge. if you open it up to a one-month chart, you can see that 160 remains the pivot. it's still about europe. don't despair. i'm sure the red herring of bashing tax policy in the u.s. will get to the front page before the end of the session. >> thank you very much. let's check out latest news in energy and medals with sharon

epperson. >> it's the euro that we see in euro dollar helping commodities and risk on trade across the board in the sector. the fact that we are looking at that euro dollar and above 130 level is significant. also keep in mind that we did get improving factory activity. that pmi data out of china best in seven months. that's also helping the energy sector and technical buying is also contributing because we have nimax crude future, wti contract above that 89.80 level that traders are watching. 112 was the session high. in terms of gold prices, we are looking at new buying for the beginning of the month in gold and that is helping the gold futures contract but also the gold etf market at a record level right now. we've seen retail investors interested in gold not only in buying etfs but also in gold coins and in terms of etf market we look at highest levels we've seen for the year here as we begin the new month. back to you, carl.

>> all right. thank you so much for that. i want to draw your attention to technical levels on the s&p crossing above the 50-day moving average for the first time since october 22nd. the number, if you are interested, is 1420.83. >> wow. >> no 200 but a lot of people watch it. >> it does matter. i think when i was listening to bob talking about how germany 52-week high, france 52-week high, those countries are doing far more poorly than we are and makes sense that we could go higher relative to our allies. >> all right. keep an eye on that. meantime, results of one particular study indicate bad news. later on, former gm vice chair bob lutz. we'll get reaction to sales numbers and as we go to break, look at this morning's early movers. there's dell at the top.

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green. hp may be a derivative play. >> that's a good point definitely. >> not often you see from a sell to a buy on a high profile name. >> not a good article by jim stewart in "the new york times." >> i disagree it was the worst deal of all time. >> because of aol? >> sprint/nextel, countrywide/bank of america. i can keep going. >> did you like the palm deal? >> that was well orchestrated. it was small. >> you're right. just checking. >> hp is a lot of different things that various ceos thought would help. >> this piece was about meg whitman checking off on this deal. >> amid dissension. >> meg was just a board member

at the time. only member of the board who was not there was rob. we're going to talk about hp. i know consistently and i will be interested to see whether the theme that was brought a week ago when he decided to write this piece on deal book is going to start to gain currency. do you split the company? >> balance sheet is very important here. i don't know if you can. >> it's hard. it would take a long time. in these kind of things either you are for keeping the company together or then you're not. it can change quickly. you can't just say we're thinking about it. >> not to mention one last point here. anything they do strat edgicaeg from now on will be suspect. it's hard to convince people they can do anything at this point. >> you have to be a second-guessing pig here. >> second, third, fourth, fifth, it will go on. it's tough. >> banks beware. one in three americans would consider a mortgage from walmart

and almost half from paypal. the problem, neither of those companies even offer mortgages brings us to this morning's squawk on the tweet. suppose walmart enters the mortgage lending business. walmart offering mortgages is like banks offering blank. tweet us and we'll get responses later this morning. you can get financing from costco. it's not unthinkable. >> i think that people -- my dad buys insurance from costco. costco has a lot of opportunities that people don't readily appear. >> i'm sticking to wells fargo. they are sticking with me. >> isn't that everybody? >> i think they own me. >> they're everybody. >> they're amazing. >> they know every transaction i do. >> where did you get your toaster? i actually got a toaster oven when i opened an account with citi in 1978. never did a stitch of business with them. still have the toaster oven.

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>> let's check in with simon hobbs to see what's coming up on a monday edition at 10:00 a.m. >> one of the big questions out of the weekend is why is geithner being difficult about tax rates. and now a downgrade of estimates for g-4 and we'll also talk to a hedge fund managers making a fortune on greek dead and possibly argentina as they hold their feet to the fire. >> thank you so much. let's get six in 60 for a monday. six stocks in 60 seconds with jim. deutsche on igt.

>> cheap. always where they could beat the numbers. deutsche says they can. they are talking agitation. i don't know. they think something can happen. i'm not sure about that. >> call on lululemon. >> they say a great quarter. wow. this is a gutsy call. people are betting against them. >> morgan stanley upping william sonoma. >> this is a housing play. people want to be in any housing play. the company is doing well. they are saying uggs are doing well. deutsche cutting oxidental. >> i think this is a cheap stock. i understand it will not rally by year end. >> for more on the names, go to our website. what's on "mad" tonight? >> if you think the fiscal cliff

will be avoided, this is the stock to buy. we get no vacation they come up with a deal. they need more time to come up with a deal. no vacation until we get legislation. >> finally, we're going to get gms numbers in a few minutes here. >> these are big. >> you have a group of companies that have warned for the quarter. overwhelming number of guidance for the quarter has been negative. housing and autos. tail winds are here. >> it's the international companies that have been so disappointing. this will be a break if gm and ford can overcome the gravitational pull particularly of europe and with europe getting better in terms of finances, these might be a place to go. >> you said that a lot of these companies are going to be managing down in europe for years to come. that hasn't changed. >> no. when i see rates go down big, i always like stocks and now businesses have to follow. >> we'll see you tonight.

6:00 and 11:00 p.m. eastern time. when we come back, wall street getting ready for probably the breaking news of the day. ism at the top of hour alongside construction spending. we'll get you those numbers and the market reaction and then one of the lawmakers in capitol hill's gang of eight, senator mark warner is at post 9. we'll talk about the fiscal cliff in just a few minutes. ♪ ♪ [ engine revs ] ♪ [ male announcer ] oh what fun it is to ride. get the mercedes-benz on your wish list at the winter event going on now through december 31st. [ santa ] ho, ho, ho! [ male announcer ] lease a 2013 e350 for $579 a month at your local mercedes-benz dealer. with scottrader streaming quotes,

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welcome back to "squawk on the street." we have october sales construction spending and of course we also have the national november ism data. all hitting right now at top of the hour. up 1.4 on construction spending. boy, i'll tell you what, that's very large especially considering much smaller implications of this number in construction spending even though it's october. this is a good number especially if we're looking at the housing side which has a lot of cottage industries with regard to jobs. still don't see ism. there has been some rumblings there may be an issue with the number. we have it.

49.5. boy, i'll tell you what, the reason that's a big number, that is the lowest number for 2012. prior to this, the lowest number was 49.6 in august. high was 54.8 in april. so 49.5 now becomes the lowest level. wow. it's going to go back quite a ways. that's the lowest level since july of '09. july of '09. back to you guys. >> thank you so much, rick. estimate on that number was 51. that is as you said clearly a disappointment. let's get market reaction to that data. dow erased almost all gains for the morning. we were up 50 plus earlier on this morning. s&p as we said earlier broke above the 50-day moving average up 1422 i believe. currently at 1418. >> we also have breaking news on gm's november auto sales. >> increase of 3.4% for the

month of november. that is short of what the street was expecting. street expected an increase of 5.5%. a couple of numbers in here. we'll talk with the head of u.s. sales for general motors in just a bit. a couple numbers that are troubling. one, retail sales flat compared with november of last year. fleet sales an increase of 16%. remember, you don't want fleet sales to be greater than retail sales in general and an increase of 16% versus retail at flat, that's going to be troubling. also the supply in terms of trucks. now up to 139-day supply. for a point of reference, a healthy day supply of any vehicle is in 60 to 75-day range. 139 days is troubling for some people on wall street. let's bring in kurt mcneal from gm headquarters in detroit. head of u.s. sales. we were talking. you had an increase of 3.4%. shy of street estimate of increase of 5.5%.

characterize last month and really what kind of impact you noticed in terms of the truck segment and what you're seeing there. >> yeah, phil. you know, you framed it absolutely correct. our passenger car sales we feel really good about that. that was up 19%. our crossed over sales were up 9%. where we didn't, you know, have as robust a business was in full sized pickups. if you look at the incentive spend going on in that segment, we are amongst the lowest here. we've been amongst the lowest for three months. we're just trying to stay disciplined. we want to be known for our products and not for our incentives. >> that's fair enough. at the same time, you have a couple things going on. one, you have a housing and construction market that are moving. you should see greater demand for pickup trucks and you are closing out your old silverado

and as a result people would say get rid of them. close them up. you have the new line coming in next year. >> we still have been saying that our inventory levels on full size trucks will end up around 200 to 220,000 units around year end. we still think we're going to be on the upper end of that range. you know, we want to be competitive. we are going to continue to be competitive whether that's marketing resources, enseincent resources. our competitors have been extremely aggressive. we are selling 13s. a lot of them have been selling down their 12s. that's put an interesting dynamic in the marketplace. the fundamentals in the economy to your point about housing,

that still looks very positive. consumer sentiment and consumer confidence both at five and four-year highs. we see those good fundamentals. the fiscal cliff and all that discussion isn't helping either. >> real quick. we have to wrap this up. tell me about q-1 production. ford increasing by 11%. what's general motors doing in the first quarter with its production? >> well, we don't give guidance on production, phil. you know, we're going to continue to, you know, use whatever levers are available to us to moderate that and to have it at a healthy level to take full advantage of where the industry might go. industry is continuing to come in fairly good and we see that continuing into 2013 so we want to make sure we have the right levels of inventory. >> kurt mcneil, vp of u.s. sales for general motors joining us from the company headquarters in

detroit. as we send it back to you, a couple things to keep in mind, you'll see stronger than expected numbers from a number of automakers particularly in the northeast. vw is a big business in new york and new jersey, sales up from the sandy rebound effect. that's what we're seeing. >> one vw headline 29.3. >> overall for the u.s. but in new york and new jersey up 40%. >> in that part of the country is incredible. thank you so much, phil lebeau, in chicago. back to the looming fiscal cliff. a deal to avoid the cliff remains uncertain as both sides continue to fight over tax code overhaul. we're joined at post 9 by virginia democratic senator gang of eight member senator mark warner. welcome. down to nyse. good to have you. >> thanks for having me. >> we read about dinners at your house. senators trying to work something out on the side. clearly it collides with headlines we got over the weekend. >> we all know what the frame of this deal has to be. you have to get additional revenues. you have to find a way to reform

the entitlements and make additional cuts and get a net net of minimum of 4 trillion over ten years. that sounds like a big number but when you think about the size of our economy and size of government spending over a ten-year period, this is so much remarkably smaller than what's being asked of people throughout europe and people in the u.k. and throughout the world. my hope is we are going to get the deal done. >> we have three weeks or so to play with at least this year some say. is that feasible knowing what you know? >> i think what you have to realize is there has to be a down payment. president outlined what he wants for that down payment on revenue side. let's have rates go back up which was the underlying assumption that was included in the whole simpson-bowles plan. the gang of six plan embraced that as well. brought the rates back up to 39%. you could still do tax reform after that to bring them back down and eliminate the tax expenditures. that's a good starting point. will we fully get through tax

reform and entitlement reform by the end of the year? obviously not. what i fear is let's not continue to negotiate this into the 11th hour. every day that we go on during this period, during retail season, you hold back consumers which we know consumer confidence is two-thirds of the economy. folks are not buying stuff because they don't know what will happen come the beginning of the year. >> is it the republicans turn at this moment to table something? >> the president laid out his down payment and they said give us more. what secretary geithner did was give them a term sheet. i don't think they are going to totally accept everything on that term sheet. in any kind of business deal i've been involved, longer in business than i've been in politics, you take that term sheet saying i like this piece, i don't like that piece. we need new ideas in this. one of the things i wish would be rather than these additional revenues being caught in the us versus them, why not recharacterize whatever revenues

are collected and say we won't use these to grow government. we're going to create a debt reduction sinking fund instead of turning this into populous argument saying anyone that pays into this, well, they're patriots. they are helping get this problem solved because at the end of the day, you know, if we're going to get to the revenues we need, we'll need even more than that trillion dollars that's part of the down payment. >> how much of the white house proposal is a line in the sand from your point of view? how much can that be moved and i'm asking you because now there comparisons this morning being made between president obama and president george w. bush overplaying a mandate, one through the election but overplaying it to the point where it would backfire as it did in president bush's case. >> what the president has asked for is 1.6 trillion net of new revenue. if you're going to get the kind of major entitlement reform that i and others believe you need to do to make sure that medicare and social security and other programs exist 20 years from now, there's that relationship to making sure there's a big

enough revenue number. what he's laid out in terms of the rates just gets you a trillion. you will need net additional 500 billion beyond that i don't think he's overasked. everybody knows for those of us that have been successful, we'll pay more. more semantics about what format. let's have rates go back up. if we can really exercise the kind of discipline and tax reform that simpson-bowles and gang of six talked about it, we need to do that. >> speaker boehner would argue he's put a solution on the table that he'll compromise on deductions. in that context why is the treasury secretary being belligerent. you just need total tax rate. total tax take to rise on wealthy and not marginal rates. >> look at those plans that people have talked about. the speaker has talked a lot

about simpson-bowles. they assume top rates went back up and you bliuilt the tax refo off that premise that included a top rate of 39%. the actuality is when we actually get to tax reform, very supportive business leader and one of the reasons why we'll get it done this time is because the business community and campaign to fix the debt and others have stepped up. when the rubber hits the road and they say which deduction specifically? i had some say don't touch it. >> the bigger issue is that marginal tax rate as far as republican party are concerned if they go higher it will be bad for the economy. it's a blindingly obvious thing. if you raise marginal tax rates, it reduces incentives in the economy. why not give them that? >> as someone that did pretty well in the '90s as a business guy building tech companies, being a venture capitalist, i didn't see our economy being

held back by what i think was a relatively fair tax code of the '90s. and, what we're saying is we have to bank that in a short-term, bank additional revenues. we've already done a trillion dollars of domestic discretionary cuts. how do we even that up a bit and move toward full-fledged tax reform? i think this is the best, smartest, quickest way if we're going to really get something done in the short-term before the end of the year. >> we hear a lot about expenditure cuts and entitlements or at least reform there. hasn't heard as much from defense. you are from a state that relies on that defense budget. it will get cut substantially. where does defense end up if we do get a deal? >> everybody wants to avoid sequestration. lots of my friends in the defense industry say don't do sequestration. do simpson-bowles indicating they have not read simpson-bowles because it was almost as high as sequestration in the top number. the numbers are roughly within the budget control act over ten

years about $480 billion of defense cuts. sequestration almost doubles that. i think you'll see something north of 480 billion. substantially lower than that 950. what folks in defense industry have said is in addition to giving us a number, give us the ability to plan. one of the things that hobbles our defense industry more than anything is the absurd way we have run the federal government on three and six-month continuing resolutions. give us a window to plan and any legitimate business can plan against the budget. give us that number. >> some see that debt limit control being taken away from congress as a lack of discipline. you're not willing to adhere to that discipline. or you have dick durbin come out one day saying he wants hands off social security and medicare in the frame work. that's where people see the breakdown in compromise. >> i think about durbin who has taken more arrows than anyone as someone who has hung with simpson-bowles and gang of six

and say entitlements have to be part of this mix. what i think we do need to put in place and one of the things that our plan did that simpson-bowles and others did was if you walk in a top line number, you can't unwind that in the dark of the night. any ability to break a budget cap would require a stand alone vote. a two-thirds majority in the senate. this would be unprecedented in terms of trying to put discipline back into budgeting which we have lacked from both sides. >> you think the gang of six or gang of eight to the extent we get tax reform next year will play an important role in that and will we default back to simpson-bowles with corporate tax rates going down? >> i believe and hope tax rates will go down. they all went down based upon a top rated 39%. we can get it done. the challenge, i believe, is when the rubber hits the road and you really start talking about home mortgage, charitable, state and local, health care exclusion, which are all of the

big ones, that battle is going to be ferocious. let's make sure we go through it. let's also make sure we have a default mechanism not like sequestration which gives us the worst possible option but a default mechanism that you can live with whether it's a tax expenditure cap as percentage of gross income or a dollar amount or some general debt reduction surcharge that might be more broadly applied. one of the things i think we need to get into this debate is we all benefited from the $16 trillion in debt that's been run up. this really is the moral equivalent of war at this point and more we can turn the argument from who won the last election and us versus them into those of us who will now be paying more into something that will reduce the problem, the more i think we could turn this into a national cause and frankly you guys watch the markets all the time. i spend a lot of time in this business field. i believe we get a real plan that passes the market smell test that hits that $4 trillion

mark, it will do more for job activity and economic growth than anything the president or governor romney talked about in their campaign. >> i noticed your pin. your rise above pin. how does that play on the hill? do people give you a hard time? >> we need all of these campaigns. one reason it will be different this time after the debt ceiling debacle and the supercommittee failure is that the business community is stepping up. trying to reinforce elected officials in both parties to do the right thing. you guys have got this effort. we need every effort possible. it's one reason i think it's good the president gets out there because we mess this up again, that $4 billion a night that keeps adding to the debt, that's what the american people are going to have to pay. they need to have their voices heard. >> need to have dinner at your house for 535 people. >> a dinner for whoever it takes and whatever it takes to get the job done. >> senator, thank you. as always. senator mark warner of virginia. >> the man who says investing in greek debt is a no-brainer.

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greece is starting a two-week process by where it will spend billions buying back its own debt at a huge discount and then canceling it. it's part of a debt reduction plan agreed by finance ministers

to cut the debt burden for greece and there are a few seizing the opportunity from greece's crumbling economy and we have the ceo of graylock capital. welcome to the program. you are on record in the spring saying this was the trade of the year. going now and buy greek debt. now, you had to have body parts of steel to make those assumptions it would come through in your favor. what was the bet? >> i grew up in the emerging markets. i think the key to success in investing in greece on the debt side was recognized in the pattern. this country had too much debt. got restructured and then a forced liquidation by the banks in europe. i think, i mean, given this buyback, what really is laid in the leaf is that the political stuff in europe is actually, you know, this is an opportunity to make money for funds. and the noise actually kicks out

these types of market run ups like 20% on the debt that we've seen in the last week. >> let's look at the chart of greek debt. yield is falling dramatically so the price is rising. it moves in the other direction. what sort of return have you made on the paper that you bought? >> well, it troughed out at 12 cents on the dollar. on the short end you're looking at a buyback offer of 40 in six months. >> will it succeed? >> there's a really good arbitrage opportunity presented by this. the yield curve is inverted. the trade is to tender on the long end and take proceeds and buy on the short end. what we did in the initial exchange was took the fso notes, sold and bought more greek bonds. one thing i would say is this is a great market opportunity but honestly looking at it from the restructuring side, they could have used the proceeds or the credit in a way that was more constructive for the greek economy. >> will the plan as it stands succeed?

is greece going to get the cash it needs and go through this process successfully? >> they'll issue new notes to give the proceeds to buy back the debt. i think the -- i'm not sure that they're going to get the amount of debt that they would like for the buyback. they'll call it a success. >> you're not adding anymore greek debt to your portfolio and opportunity has topped out from your standpoint. have you layered into other areas of european debt? >> this is the best trade still. you're talking about a yield of 14.6% on the short end. that's a ten-year debt. and 12% on the long end. so this is still and post-restructuring, it's going to be a better investment opportunity. this is post-restructuring scenario in the country. the other countries are trading 6,000 basis points inside of this. given the fact that debt relief is irrational but from market opportunity you have a better opportunity after this than you did before. >> are you not adding anymore

debt simply from a portfolio management standpoint? fully weighted in that? >> i think we'll tender on the long end, buy on short end and reverse it when the curve rationalizes. >> we must mention argentina if which you have been prom nenlt. this court ruling came through on wednesday. now the government has to decide whether to pay back your holdouts or whether to double down and face prospect of defaulting. >> there is an emergency filing over the weekend and we'll have to see what happens with that. argentina is cornered. the lesson to be taken from this is i think we're seeing a bit of a resurgence which is not bad thing from my point of view. >> congratulations on the greek trade. >> thank you. >> we're watching a tech mover in today's session. let's get over to mary thompson at headquarters. >> right now up 6.9%. the reason goldman sachs upgraded to a buy from sell,

three reasons it likes dell. they say pessimism about the pc market is so depressed there's room for upside next year. in addition dell's earnings estimates have come down so far the risk reward play on this stock looks better. lastly they like the cash holdings at dell. they say that provides a nice buffer for the company in the downturn. up 6% almost 7%. back to you. >> thank you very much. remember the economist who said the iphone 5 would boost fourth quarter gdp. he slashed his estimates. jpmorgan chief u.s. economist michael feroli will tell us why. >> bob lutz, a month away from the cliff, how worried is he for the auto industry? what does he make of these numbers? back in a minute. twins. i didn't see them coming. i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio.

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jane wells is live at the port of los angeles with the very latest. jane? >> reporter: hey melissa. negotiations are expecteded to start up again this morning but that's not stopping the strike. you have 800 clerical workers that walked out after not having a contract for over two years. it's the longshoremen honor the picket line that has brought everything to a standstill. the national retail federation is asking the president to interve intervene. the work stoppage is increasing shipping costs a billion a delay. each day of the strike affects 0.1 of 1% of far east north american shipping volume. an east port strike is also looming if an agreement is not reached by december 29th. cargo airlines, china, korean air and the union is striking to

make sure that jobs performed by union workers stay union jobs after these workers retire. management says they don't want to do that. they call it featherbedding and claim they offered compensation packages for senior employees worth $109,000. time off for most senior people for 11 weeks and guaranteed job security. i'm hold ttold the average sala $85,000 for the clerical workers and the mayor is enraged and wants negotiations to continue around the clock until this thing is settled. back to you. >> jane, thank you very much. in the meantime, do you remember the guy that said that growth in the united states would be half a percent higher due to the launch of iphone 5. now he's revising down q-4 predictions. he'll be with us next on cnbc.

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here are stories we're squawking about at 7:32 on the west coast and 10:32 on wall street. nimax falling to 49.5. that's a miss. reading below 50 indicating contraction in manufacturing in the last six months. costco, lowe's and clorox hitting all-time highs and dean foods announcing sale of morning

star foods division to a canadian dairy company for 1.45 billion. shares of dean are up 2% on the news. remember the economist who said the iphone 5 could boost fourth quarter gdp by half a percentage point? he's out with a new note revising downward his estimates. could one phone still impact the overall economy? michael, good to see you. >> you too. >> what happened to that iphone 5 impact? >> what we have seen in retail sales report in october and november suggest that the phone sales were good and there were a couple other things going on here that are subtracting from growth. three things in particular are hitting us. one in the third quarter we built up inventories at a too rapid pace. sandy did seem to impact things at the start of the quarter, disrupted activity. that held back things. while we may get bounceback from sandy related rebuilding efforts, i think there's a third

thing which is probably some of the fiscal cliff uncertainties could weigh in on activity as we head into november and december. >> do you think that we had no iphone 5 impact or that had we not had the impact, revisions could have been lower. >> i think that's right. we don't have data in yet. iphone did give a boost for fourth quarter growth. as i said, you have to net out all of these things so you have positives and negatives. right now there are negatives that look like they are bringing growth under 2% in the fourth quarter. >> in terms of the retail sales when you look at what iphone 5 impact is, there's no clear attribution to what the iphone 5 is providing. it's only an electronics line that you're looking at. >> that's right. there are two categories, electronic stores and online sales which we did see jump in a way in september and october that's consistent with the reports we had in terms of number and dollar value of the phone sold. right now it's not a perfect

read. it looks consistent with some lift in the fourth quarter from the iphone. >> one of the mysteries at the moment is why consumer confidence remains as strong as it does. is that, do you think, because in your analysis, a, most americans don't understand what the fiscal cliff is or the impact that it could bring or do you think it's because they believe that ultimately we will get a deal by december 31st? >> well, as you say, it's a bit of a mystery why confidence is so high. it may have something to do with the housing market and house prices being up around most of the country. that probably does help confidence some. i expect as you point out that most people probably don't have on their radar how large a tax hit we could have early next year if the fiscal cliff actually materializes. so it is a mystery. it does seem like right now consumers aren't too worried about the fiscal cliff. >> at what point do you get concerned? it sounds like perhaps a risk of revisions to q-4 estimates to the downside at this point

because as the negotiations grind on and we approach year end, it might reach more of the forefront of consumers' mind and they may pull back. are you concerned about that impact? >> i am. right now we only have october data in hand. and fiscal cliff fears really accelerated in november. if you want to proxy that with something like google searches for fiscal cliff. so we don't really have much november data yet. or december data of course. i think that's where if you're going to see fiscal cliff uncertainty hit, that's where you feel it. i think there is a risk that we could go even lower than 1.5 on fourth quarter growth. >> michael, it's interesting that at no point during this conversation have you elected to talk about the federal reserve which is buying $85 billion of assets every month behind the scenes and on september 12th announced it would have qe-4. have you not mentioned it because you don't think it has an effect on the economy? >> i do think it has a marginal

positive effect on the economy but there are other things going on as i mentioned. as you point out, next week there is a fed meeting. we do expect that they will continue with their current asset purchase program and announce that it will continue past year end. that will be modestly supported for conditions but as chairman bernanke himself pointed out, there's only so much that monetary policy can do in this environment. >> good to have you. thank you for your time. let's get a market flash back at hq. mary thompson is on the case. >> we're looking at two companies because there's a deal in the work. computer sciences selling its unit. the price tag a billion dollars. computer sciences will use the proceeds to buy back stocks and this deal will be to adjusted

easte earnings next year. carl, back to you. >> thank you so much, mary. still ahead, find out why there was a $1 million bet made on las vegas. zappos ceo joins us next. the co-head of media communication and interin the at ubs will join us. [ female announcer ] if you care for someone with mild to moderate alzheimer's, you'll also care about our new offer. you get access to nurses who can help with your questions. and your loved one can get exelon patch free for 30 days. if the doctor feels it's right for them. it cannot change how the disease progresses. hospitalization and rarely death have been reported in patients

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ubs is holding its annual media conference. it's the longest running conference on wall street. we have sam powers here to tell us a bit about what's going on in that part of the world. i'm sure guests are coming in giving presentations this morning, sam. another sign of the digital age and media companies trying to grapple with it. news corp shutters the daily.

something they spent money on to provide content to ipad users. as we head into next year, give me a sense as to what major themes are that you're seeing not just from m & a perspective about you from all capital allocations perspectives. >> it's a great question, david. thanks for having me. the question really ties into m & a. i think it will pertain to a lot of m&a. you alluded to challenges in the industry. ceos are more comfortable with structural changes they've seen in the industry. there are a few things coming out of key themes. they need more content. premium content that consumers want to engage with. something you didn't touch on is there's a lot of push toward international expansion with 20% to 30% of revenue coming from international and when you talk about capital allocation, the companies have extraordinarily healthy balance sheets and rate environment is as positive as

it's been. a great opportunity to really drive m&a volume in 2013. >> you mention capital that they have available. when i think about one of the themes for this last year amongst many major media companies that you bank, it's buying back stock. it's not about growth as much as it's about shrinking the cap. that's fine if you're an investor. but that's not a great growth story, is it? >> no. i completely agree with you. you have seen an unbelievable focus on return capital. it was understandable when we came out of what happened in '08 with companies that had to focus on their balance sheets and wanted ironclad balance sheets. when you look at annual buybacks of 10%, most of the large cap media companies have authorizations close to 9% of their shares outstanding. those get refreshed every year. there's only so much capital you can return to shareholders before shareholders ask the question, you know, what are you doing with this capital? are there places to invest or

are you a balance sheet story where you'll continue to return this cash flow? >> the advent of the internet in the '90s sparked deals of size and significance. m&a has been muted this year. we know that. what are expectations for next year? do we see bold moves from bigger media companies when it comes tom not just buying back stock but saying, okay, i'll take a shot here because the world is changing under my feet? >> it's a good question. i think you'll see more activity. i think the original point i made about people being comfortable with the environment and it's alluding to the video environment. over the top scared everybody for a long time. there's a lot of questions. what was netflix going to do to its business model? how was content going to be monetized. with the tv everywhere infrastructure coming together, companies are more comfortable about how the world looks going forward. that's one of the big things holding back m&a.

ceos were worried about buying a company and then having the world shift under their feet. a lot of those outlines are in place for doing more deals. >> right. in this world regardless of whether it's just a broad band connection or not, you say they will figure out a way to get paid. >> exactly. if you look at over the top distribution, that's been another way for content providers to sell content. if anything, it's been a new customer for them. >> sam, we're going to leave it there. looking forward to seeing you later face to face. i'll interview tom rutledge who runs charter. u.s. media conference being held the first three days of this week, i believe. sam powers, thanks for joining us. >> thanks, david. it's a new week, it's a if you month and rick santelli is champing at the bit to get on the show so we moved up his spot so he'll join us shortly pointing the finger in the blame game and with 21 days until christmas, ebay seeing large rise in mobile shopping compared to last year and so is

e-commerce the future of retail? stay with us.

time for santelli exchange on this monday morning on leadership and the blame game. good morning, rick. >> good morning, carl. all i hear about blaming this person, blaming that entity, blame, blame, blame. if i look at the first administration of president barack obama, there was a lot of inherentiiting of debt. i'm not saying i agree or disagree. there's many that believe blaming someone else is just a way to shirk leadership. i'll tell you what. here's the problem with the blame game. when blame becomes an issue, it takes the empathy out. it takes the civility out and it green lights sustaining dysfunctional patterns. i'll give you an example. once you start blaming for example, let's take grover norquist. he's good target. once you start blaming grover

norquist for a pledge made to get elected by representatives, you are totally doing a bait and switch. all of a sudden the issue of entitlementsbowles. why? they will look straight in the camera and say the gorilla in the room, entitlements. but when the blame game happens and you basically do bait and switch, you create a red herring. in this case, the red herring, and it is red, are tax issues. or taxing the rich even though the real issue you're avoiding, the big one, are the entitlements and the spending. now ross lynn carter -- and this is so ironic, because in many ways president carter was probably one of the most dysfunctional presidents, or at least didn't have the efficacy to ever put together a record that was to be proud. but the first lady had one of my all-time favorite quotes and

i've used it before. we're going to show it on the screen. a leader takes people where they want to go. a great leader takes people where they don't necessarily want to go, but ought to be. so let's go over this one more time. today we had senator warner on. and you know what, i really liked a couple things he said. because what he said was, is think outside the box. see, we need to get away from the blame game, get away from the red herring. he says, well, start a debt reduction sinking fund. i haven't heard that idea. there are many ideas, but the point is, is that the president has a legacy to protect. okay? many people, including, you know -- we had jim bianco on last week and were talking about where the leverage is, and it's unfortunate, politics is about leverage. what i said is, i think the leverage is misplaced when they want to blame the house of representatives. the blame game, sustaining dysfunctional patterns, entitlement, spending. civility out the window.

so what we need to really do is have the president come down and do something very comprehensive. i'll tell you what. if i sign that grover norquist pledge, and we are given a four or five dollar to one debt reduction deal, i might break my promise. okay? because if you break your promi you did it for reasons that promoted solutions, you'll go from being vilified to being a patriot. but blaming other people, dog ate your homework, that's never going to create a legacy for this president, because in 20 years, they're not going to remember the nuances, what they're going to remember is president barack o blama. >> you suggested the discussion about marshalling tax rates or taxes on the rich was a red herring in debt reduction. the problem that you have is right or wrong, obama has just won the election on that basic pledge to raise taxes. >> wrong, wrong, wrong! you know what, that makes no sense. how many people do you know that said i'm going to vote for the president to have more debt, and

in an economy that can't grow it's way out of the issues? we currently only take in about 15.5% revenues. we need to get to 2021. >> i understand that. >> it's not a tax problem, it's a growth problem. and he has no growth plan. so then they blame others, because they don't have a plan. >> but he was able to get through the election doing precisely that. >> got through the election on social issues. on the economy, i think it's pretty clear that nobody voted for four more years of the current economy. four more years to get his house in order and he's not going to get his house in order using the red herring of taxes when it's entitlemen entitlements. it just isn't going to work, simon. >> i get it. i'm just pointing out -- >> you know what, let's take jobless claims. >> i get it. >> over the last three days, jobless claims to sustain that renewal again which i think is a bad idea, that's 30 to $35 billion a year. i heard many democrats say that's a small amount, why shouldn't we do that? that's about halfway to the total amount they're talking about taxes.

but whent's that, it's small. but when it's the 70 to $80 billion am toortized over ten years, all of a sudden it's big. i'm not saying don't raise taxes. if i signed the pledge, i would do it for good reasons. i haven't seen a good reason. i haven't seen a plan that promotes the big guy in the room. >> see you in the next hour, rick. rick santelli live in chicago on cnbc. it's tweet time. a new study finds one in three americans would consider a mortgage from walmart in almost half from paypal. the problem here, neither of the companies even offer mortgages. so that brings us to this morning "squawk on the tweet." suppose walmart does enter the mortgage business. complete the following sentence. walmart offering mortgages is like banks offering blank. tweet us@squawkstreet. we've got your answers coming up next. i thought we won at everything? by losing, we win. win what?

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like banks offering what? ash writes, it's like banks offering breakfast cereal. nester writes, walmart offering mortgages is like banks offering rollbacks on fees. and owen, like banks offering ben bernanke's snuggees. i'm sure somebody makes those. >> ben bernanke snuggees? just in time for christmas. if you're ever wondering what carl quintanilla does on a friday night, here's a sneak peek at what he did this weekend. >> up down, up, down! roll and back, roll and back! >> carl's got moves, apparently. carl doing the famous dancy dance at a concert for children at madison square garden this past friday. joins the ranks of elijah wood and andy samberg, but not as well as carl. and you must -- did you practice? did you have to warm up before the show?

>> i'll tell you one thing, they don't give you a chance to rehearse. you walk out while the show is going on. there is your preparation. >> that's me and shannon, the choreographer in the dressing room in the bowels of msg. we have all emceed like black ties for bankers. there is nothing like appearing before a room of 5,0 5,000 4-year-olds. >> i would assume your kids were impressed. >> yes, their jaws on the floor, we dance -- it was a great opportunity. and by the way, wild brain is the production company that produces yogava gava, a micro cap entertainment company, very nice to ask us to do this. i don't know about your kids, david, but ava and lily are up sessed or were obsessed. >> we missed the dancy dance. >> we have passed those, thankfully. we're into musical theater overall. so, you know, more likely we'll get something more established. but you had some nice moves,

carl. >> thanks for airing it. >> very adept, especially going forward and back. very good. >> it was a saturday night fever with the pointing. >> denny terrio. >> we have don yaktman on. he thinks dividends will surge next year and he'll tell you why. i don't know if you caught the "new york times" saying investors are overreacting to the prospect of rising taxes. we've got him on to explain and see if he's getting deeper into tax. >> good piece. we talked about it in the 9:00 m. we'll talk europe. here's what you missed if you're just tuning in. welcome to hour three of "squawk on the street." here's what's happening so far. >> we need to recognize the short term challenge is the fiscal cliff. the structural challenge is what it's going to take to get a grand bargain. >> europe has dealt with some of its long-term issues, even

though the economies are week, and given the relative returns on value and offer in markets, i detect the first signs of people shifting more towards europe from the u.s. >> this is pornography for grover norquist, just like the supreme court, he can smell it when he sees it. he will target, okay? he will destroy republicans who go and pledge. he is much more powerful than any individual -- any individual -- any individual ceo. maybe you want him to go into the pharmaceutical business. the weight loss business is for sale. not a lot of synergy there. but you can't find growth in the personal computer business. it just doesn't exist. >> no. >> there's the bell. >> let's not continue to negotiate this into the 11th hour, because every day we go on during this period, during retail season, you're holding back consumers, which we all know consumer confidence, two-thirds of the economy, folks are just not buying stuff, because they don't know what's going to happen.

>> we're checking our lists, as the "squawk on the street" countdown to christmas continues. ho, ho, ho! good monday morning. live at post night of the new york stock exchange. let's get a check of the markets this monday morning. dow close to the lows of the day, 31 points. s&p negative as well. only the nasdaq hanging on to a point and a half after ism this morning was disappointing, even though auto sales haven't been too bad. deckers outdoor up sharply after getting an upgrade to buy from neutral. the firm says it sees a strong second half of 2013 based on conversations with those who have previewed the fall 2013 collection. also jcpenney, one of today's biggest losers, takes its target for the retailer down from 20 bucks to $17. the firm citing results, and says they need to reduce working capital through the holiday

season. a look at the road map. chrysler and ford logging big sales in november but that could all change if we go over the cliff, right? we'll talk to gm former vice chairman bob lutz to break it down. ce zappo's investing $1 million in revitalizing las vegas. he'll tell us about that and give us an update on the holiday shopping season when he joins us live. then the state of the states, the fiscal cliff edit n edition. we'll find out how fitch thinks each state in the u.s. is prepared for the cliff, and what it means for our economic future. and what do yahoo!'s meyer and kitchener have in common? it's car share company get-around. why high profile money from tech and celebrities alike is going to the san francisco start-up when we talk to the co founder and ceo. but first up, november auto sales jumping for both ford and chrysler. if we go over the cliff, though, our next guest says we'll see new car sales plunge 20 to 40%. bob lutz is the former vice chairman of gm, as well as former president of chrysler.

he's also a cnbc contributor. bob, good morning. good to have you. >> good morning. good to be here. >> let's just walk through what you thought of the sales figures from this morning. >> well, i think everybody was expecting a weak november, and informed, it turned out pretty well, despite the disruption caused by hurricane sandy and a shortage of availability and so forth. i think gm was better than they themselves expected. but -- and actually up year over year in if all the brands. but gm had a weak month in pickup trucks. they have too much 2013 inventory and not enough discounted '12 models. but that will settle out. >> ford, i'm sure you've already taken a look at it, not only f series up 18%, that raised some eyebrows at this desk and raising production 11% for q1. how much optimism can we read into that? >> well, it all depends on your inventory levels. you have to make some sort of

assumption, and i think the assumption that all the companies are making is that somehow a compromise will be found, and we will avoid the draconian automatic spending cuts. and tax increases. >> yeah. speaking of which, bob, at least over the weekend, it looks like the white house has moved their piece, and they are not going to move again until the republicans table something. how do you see these things going down? we've got three weeks to play with here before everybody really does leave for the holidays. are you optimistic? >> i'm optimistic by nature. and i have a feeling that when the economic future of the country is at stake or at least the near-term economic future of the country, people are going to rise above and do the right thing. and i think the republicans, frankly, are going to have to accept some tax increases. the wealthy are going to have to accept some tax increases, even if only temporary. but on the other side, there's got to be massive spending cuts

and entitlement programs, because you can't have the -- a minor revenue increase without a decrease in spending. and then again, my favorite solution would be a temporary national sales tax, and a federal fuel tax, which is kind of, you know, peanut butter across the board for everybody. and would raise massive amounts of revenue. >> right. i thought you were going to say, you know, your idea, although politically a tough sell. agreed? >> yeah. >> if a sale at all. i noticed you're wearing the pin, bob. >> yes, i am. >> i wonder if you detect intransigence, any asymmetry of intranscript jenson either side, right? are democrats holding out too hard on the tax hike increase? are republicans insisting too much on more specificity on entitlemen entitlements? >> i don't think either side is giving right now. as you know, intransigence on

one side begets intransigence on the other. and i think we're going to have to get closer to the wire before somebody comes to their senses and says to the other side, look, we can't let this happen. let's work out a deal. and i'm optimistic that that's going to happen. but right now, you know, that earlier contribution on the blame game, that really resonated with me. >> yes. >> and i think pointing the finger at one party or the other at this point is just not proddive. >> it sounds like what you're saying, bob, is that stocks -- the market has to scare washington. right? i mean, somebody the other day said that stocks are sort of like those deal a meter focus groups they have during debate nights. and that you really need to see investors turn that dial before the two sides ratchet up their commitment. >> yeah. and i think, you know, as always, if you're an investor an automobile company planning first quarter sales, you can either bet on the down side and

cut production and not invest or sell your stocks now or whatever. but most people don't like to do that. most people like to bet on the up side and assume that everything is going to be all right. and that is certainly what i would do, if i were still in the car business at this point. >> bob, that's the way to kick off the week. appreciate your time, as always. bob lutz wearing the rise above pin and ann arbor. netflix in the red. mary thompson. >> worst performing stock in the nasdaq, down 3.3%. there's an article in the "wall street journal" questioning the company's aim to become a premium cable channel while it louds to keep costs low, it's questioning how this is going to hurt, because it won't, of course, be able to get those lucrative syndication rights. as a result, the company basically depends on increasing subscribers as a way to increase its profits. again, the stock down just 3.3%.

carl, back to you. >> thanks, mary. when we come back, the ceo of zappo's.com. sin city. and the state on retailers this season. and rick santelli working on more for the next hour. >> absolutely, carl. we'll be back with dan stesich, floor trader, and the slope everybody is talking about. what about today's ism number, the employment index, what does that say about tomorrow's adp or friday's bls jobs report? sounds like a '50s cereal. but it's important. we're going to talk about it all with dan stesich.

♪ there is perhaps no bigger champion for the revitalization of the city of las vegas than zappo's ceo tony shai, founder of the downtown project in las vegas and moving headquarters into the city by next fall. tony shea joins us this morning to announce yet another pledge. tony, good morning to you. >> hi, good morning. >> what have you got in store now? >> there's a lot of stuff going on. we are excited to be moving into the old las vegas city hall in nine months. the city literally moved out, and it's all part of our goal to

actually build our campus and have it integrate with the city and really be part of a big revitalization project. >> and then you're also pledging another $1 million to venture for america. help us understand what that is. >> yes, so we started working with venture for america. they're kind of like teach for america, but for college graduates that want to become entrepreneurs, and we started working with seven of them, and have been really happy with their participation, and they've been living in the downtown area, becoming part of the community, are involved with our recruiting and helping out tech start-up companies here, working with connectivity, bike sharing, car sharing. a lot of the projects that are going on. and for downtown project, we have a $350 million budget, $50 million of that is to the investments -- small businesses to help build a sense of neighborhood and community. $50 million of that into tech start-ups, and $50 million into

education, arts and cultural activities, and then $200 million to real estate and they have been great in being involved with all those different areas. so we made a pledge to them to commit to $1 million over the next five years. >> wow, tony. we read a lot about the revitalization of chicago as a tech hub. obviously silicon alley, lower manhattan in new york city. where do you think vegas fits on that map, and what's the trajectory for the city on that front? >> it's the fastest growing part of everything we have been working on. two years ago, the vegas tech start-up scene was virtually nonexistent. and we've had several companies just ones i happen to know of, there's been ten tech start-up companies that relocated from other states to downtown vegas. so, for example, one of the companies is remotive. they make iphone-powered robots and moved to downtown vegas about a year ago, originally three people from seattle. they had considered silicon valley but then we recruited them to downtown vegas and now

they're at about 20 people. and recently announced $5 million in funding from sequoia capital. so it's really happening here and it's pretty exciting to be part of it. >> yeah, and the city definitely needs it. that would be great if it could catch fire and sounds like it is. talk to me about retail. how did cybermonday go? how are you feeling about the season at large? there's been some discussion about how good the numbers looked overall for black friday weekend. and then you know, the ensuing debate about, well, our consumers simply shifting around the amount of money they were going to spend anyway. >> we're having a record season so far. we had a record cybermonday, and one thing that we're finding interesting for our business is that we start out selling shoes and so that's what we're known for. we're seeing more of our consumers shopping for clothing, and also shopping on mobile. and i think part of the reason why we've been able to get so many consumers to shop on clothing from zappo's is because of our -- the way we offer free

shipping both ways and our 365-day return policy. so we've seen consumers will sometimes buy ten outfits and try them on and send back the ones they don't want or don't like. and we pay for that shipping back to us. >> any -- have you seen any worrisome signs of hesitancy to spend or, i don't know, metrics on tickets that suggest maybe they are beginning to figure out the possibility of tax increases after the new year? >> we haven't really seen anything on our end, but, you know, we're really just focusing on our business and so i'm not sure what's going on in overall trends. >> yeah. well i know you've got a good eye on the consumer. finally, you mentioned free shipping. obviously, it's a competitive market space. pressure on margins? i mean, is there a breaking point when it comes to retailers having to bow to what consumers now see as their god-given right to have free shipping? >> well, for us, we actually take it one step further in that

it's free return shipping, as well. and that's something that we have just built into our brand and business model, pretty much from day one. and so what we found is, yes, it does cost more. but we really view those as our marketing dollars. it's a way to get consumers to be loyal, tell their friends and family about it us, and basically our whole philosophy is to take most of the money we would have normally been spending on paid ads and instead invest in customer service and customer experience. so things like the free shipping both ways. >> yeah. it definitely is a talker. and something that consumers -- by word of mouth, one of the first things they mention. tony, keep an eye on all your good work in las vegas. thanks for the times today. >> thanks for having me. >> tony hseh from zappos. the cost of taxing the rich has been one of the central debates. find out what could happen to the 1% if we don't get a deal. we're back after a break. the holiday season is here. and that means lots and lots of photos with a certain someone.

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on your holiday shopping from l.l. bean. ♪ raising taxes on the rich is one of the most hotly debated topics. what would happen to the country's wealthiest individuals

if we don't get a deal? robert frank is here with more on that. i can hear people turning the volume up all around the country, robert. >> we know the wealthy are worried about tax hikes but they should worry more about the cost of not getting a tax deal and going over the cliff. here's why. the u.s. has around 5 million millionaires with a total weather around $18.8 trillion. as for next year, there are three possible scenarios. all of them depend on the cliff. if we go over the cliff, the population of millionaires would drop by around 315,000. their fortunes would drop by $240 billion. now, if we get a deal but it's bad for the economy, the millionaire population would drop by around 26,000. but if we get a deal and here's the good news and the economy grows, the number of new millionaires would be 230,000. their fortunes would soar by $1 trillion. just to underscore the cost of the cliff. if there were no threat of a cliff at all, the number of millionaires would grow by

443,000, a 9% increase. this just looks at the impact of economic growth. the cliff deal would also raise taxes on wealthy. that could temper some of that growth. but the economy and markets are the real drivers of wealth, carl and could create more than $1 trillion in new millionaire weather if wealth if we get a deal. that should be another incentive for guys in washington to keep on talking. carl? >> as if they need another incentive. great stuff. thank you so much. >> thank you. >> robert frank back at hq. rick santelli in chicago also talking about the cliff and europe, as well. right, rick? >> absolutely. with dan stesich, didn't you love mr. frank's piece? i like tax increases on tax revenues increase because of -- >> because you get more revenue. you grow an economy. >> it's automatic. if you pay x percent and growth goes up, you at a more. that's a tax increase we could live with. what are your thoughts on the moguls and cliffs regarding what

we're discussing? >> i think there is a big overplay by the democrats on this blaming the republicans if we go over the fiscal cliff. if you look back to 2010, a lot of buttons were pushed and thought it would be blamed on the republicans. short term blame on the republicans, long-term blame on the incumbent in office. >> all i can say, two years, november of 2014, is the next time for an election. 365 times 2, basically. a lot of memory loss there, you know, if both sides dig in. ultimately, president owns whatever happens at this point. >> exactly. in 2014, it's what happens then, not what happens in 2012. >> let's talk about today's ism. oh, my goodness, the low since '09 -- the employment index as you were study, give details. >> lowest in september '09, trending down since april. a lot of these numbers, obviously written off to sandy. but you really have to look. april 12th -- or april of '012, we didn't have a hurricane, it was trending down. is it because employers are nervous about what's going on, the nonsense going on in d.c.

right now? and they're holding back on any decisions? i think it's more that than sandy. >> this is really fascinating, because the slow down that's at least within the index of today's ism report, we have adp tomorrow, looking for 130,000, the jobs report friday looking for 100. we're at 170 just on dls. so this combined number isn't looking too good at this point. how much is blamed on sandy when it shouldn't? >> everything blamed on sandy. that's going to work for a while. once you dig into the details, wait a minute, this isn't all sandy. because the east coast is a very big part of the -- >> obviously oh, yes. >> the economy. >> everybody who has gone through sandy. >> chicago is a big part, texas, california, they weren't affected directly by sandy. so that will come back much quicker if it's going to come back. that's where you have to look, to see what the trend was beforehand. >> okay. now europe. you know, there was a little bit of a -- a confusion this morning when spain asked for a bailout. they're talking bank bailout,

country bailout, new program. rates are down. i've seen many stories, if this is really going to be a positive rates being down, we have to really draw in more global investors. do you think that will happen ultimately? >> ultimately, i do think it will. any time europe gets pushed to the background, i'm kind of pleased. as long as their banking system isn't going to affect ours, i think we can still grow internally with some of the other partners out there. china looks like it's coming back. so yeah, maybe that will help. >> in china, you bring up one final good point as we wrap this up. china, many believe that it's reaching its soft bottom. i don't dispute that. i know if we look at shanghai composit composite, it doesn't necessarily reflect that. in the end, sideways movement at these gdp levels is still a headwind considering the growth china had four years ago. somebody is going to have to make that up. i look at gdp not only domestic, but in global terms. >> one thing you have to remember, i don't completely agree with you, it has been soft. 7.5% growth is still pretty good growth. that will be made up. i think brazil is coming back

and some other countries. so it won't be as rapid as we had. but if china should come back, and that's still an if, then it's going to have to be made up somewhere. >> dan stesich, thank you. carl, back to you, bud. >> thank you so much. a few minutes left in europe's trading day. we have some 52-week highs in both paris and frankfurt. we'll see how they closed out the session. talk about the impact here this afternoon in just a moment.

we're going to talk about european stocks for sure.

but we're also going to talk about kate middleton officially pregnant. i mean that, is the news of the day. >> oh, yes. well, for many in britain it will be. kate middleton is pregnant. markets overall today really positive tone emerging in europe. not just from the equities but the bonds and importantly the comments. let's just check out where we are at the european close. first of the week, first of the month. >> the european markets are closing now. >> in fact, we were doing much better than that on those two pieces of data coming out of china that manufacturing was improving and you had the spanish market up 1%, italians more. we have cut that because of what has happened in the united states the ability to get leverage higher. the big news in europe, apart from kate middleton's pregnancy, the fact that the greek debt buyback process is beginning, it's going to be a dutch auction, they'll work out exactly where the market stands and price it at the end of that. the indication they really want it to succeed. in a few moments time we'll take you live to the finance minister's meeting in brussels.

sylvia will have more on what the greek finance minister is saying to the rest of europe. lets show what the market action is today. and it is positive. there are reports they could cut the debt by $20 billion euros. that the state-run pension funds will take part. the pricing isn't as harsh as many in the market feared, because we had on friday for example greeks at the new york stock exchange saying if you take another haircut on the 70% that those pension funds have letter already taken, they won't be able to pay the pensions now and fear the social cohesion would break down. but everybody seems happier today, certainly interestingly. the greek bond market has rallied again today so you see the yields coming into negative territory. and those greek banks have done well. of course, they're sitting on a lot of greek debt and will be strong-armed into selling that through this process we imagine. but maybe not at the sort of loss -- or maybe a larger profit, whichever way you look at it, as we might have thought. and therefore, the greek stock market, like telecom, blue chips doing well, and the arc up

1.25%. and in the last three months rallied 26%. more broadly, all of the peripheral bond markets appear to be rallying, as well. the tensions are easing in this italy and spain. let's show where we are, in spain, for example. you see the way in which the yields are down there. again, the spanish market is rallying. jpmorgan believes the rally and peripheral bond markets will continue because institutions will be forced into the core, because it's expensive not to be invested there. if you like. and at the same time, because they think that -- actually, yields at this level are still too high for the ecb. don't fight the ecb, is the message from jpmorgan. buy where we are at the moment. let's show where we are on italian debt. and you'll see again the yields have fallen in milan. there you go. and if you look at the spread, the difference between italian debt and german debt, that fell below 300 basis points today for the first time since march. into the fray, and i think this is very important. jim o'neill at goldmans on cnbc today, did you catch it, he thinks because of the fiscal

cliff here in the united states, increaseingly investors are moving into europe. check out what he had to say. >> i detect more and more longer-term investors, and the cautious long-only ones, who are being influenced by this and starting to think, you know what, europe has dealt with some of its long-term issues, even though the economies are weak, and given the relative returns and value on offer in markets, i detect the first signs of people shifting more towards europe from the u.s. >> mean time, deutsche bank has out today which says the unconditional nature of the back stop we got from central banks changed the trajectory for risk assets and say equities will be the clear winnerment i point out to you, the german stock market so far this year, carl up 26%. phenomenal. >> unbelievable, begin what they have to deal with. thanks a lot, simon. and congratulations, too. >> i'm not pregnant. >> it was none of my doing, let me assure you.

>> as simon mentioned, finance ministers in brussels to discuss the greek debt buyback and more. sylvia is live in brussels with the latest on that. the whole world is watching that story, as well. hi, sylvia. >> well, hi there. exactly,f looking at the markets, you wouldn't think we are in a crisis. but it's the old talk about the two ugly sisters maybe at the moment looking less ugly than you over there in the u.s. but we both have our problems. top problem, of course, still on the agenda is how well will this debt buyback program of greece run, as simon mentioned before, there is going to be a bit of arm-twisting, a bit of sweetening in there and they want to make extra super sure that this works, because let's face it, if it doesn't work, the whole debt -- the whole plan, the whole rescheduling plan and reprofiling of debt plan and the whole rescue plan for greece that's been hammered out by yet another 15 hours of talks last week here at the brussels, the whole thing will fall apart. but the hope there is that

senior -- that mr. sonaras from greece will report back that he will see this problem through before december the 13th when, indeed, the eu leaders meet here again, and then hopefully they can actually hand over or sign the check for the next tranche of the greek bailout package would be a good $30 billion with another $10 billion staggered over the next three months in the new year. that's the principle hope we live on, and the markets evidently believe this can be pulled off. >> sylvia, thank you so much. we'll be coming back to you more on the story. sylvia in brussels. we want to bring in bob pisani with a look at the dow. >> you know, we did not move on worries over the fiscal cliff over the weekend, as people thought we would. but we did move on greece. got a little bit of a boost preopen. and since then, frankly, the ism numbers have just been a real disappointment. and we are moving on that. here's the dow intraday. here's where we got the ism

number. and you can see we have been drifting lower ever since then. and this really is a disappointment, this number. this is the first read we get on the overall economy every month here. and let me point out what's been going on here. the sectors have been risk off by enlarge so transports are notably week. materials and industrial. there is your risk off trade here today. i would point out, technology has been an upgrade over at goex and the overall technology sector, tough time in the hardware group doing better today. so there is an outlier in tech. as for the ism, what was going on here, really there was very little good news. take a look. the overall number, the headline number, lowest since july 2009. the employment component in this, lowest since september 2009. that's probably the second-most watched component of that. so there wasn't a heck of a lot of good news in this thing. manufacturing overall, just weaker. and you can't blame it on sandy. i'm sorry. rick was mentioning this before. look at the ism chairman, what he had to say. the chair of the committee. the second half of the year continues to show a slow down in

demand that's been down -- moving down since the middle of the year. the responsibilities on the fiscal cliff -- if the program put in place is more taxes and big spending cuts, which will push us toward a recession, forgive it. and that's what we're getting. more taxes and big spending cuts. so the idea here is this sort of overall concern that the fiscal cliff issue, even if it's resolved, means more austerity. and that's a problem overall for the markets here. take a look, though. we've held up reasonably well in the ism manufacturing. this goes back for the last several years. the big concern here is the trend basically has been down. we've been sideways for a couple months. and now four out of six months showing contraction. in terms of the market, we're still continuing to hold up pretty well. you notice we don't get any real panic here. that's because of the seasonal time of the year, partly. december to january. very big, strong two-month combination. a lot of people try to get in december, ahead of -- beginning of the month buying in january. the news has been manageable in europe. you heard from simon, middle east has been a bit calmer in

the last week. as for the bears, they've got a good point, carl. we're two big down days from the lows back in november. and remember, the dow was at 12,500, just about two weeks ago. we're 500 points higher today. >> yeah. >> so two bad days away from going back to those lows. >> so true. thanks, bob. bob pisani. verisign getting a lift today, mary thompson is at hq. >> a turn around for the stock that fell last week. the reason, the government did renew its contract, allowing it to keep its status as the internet registry. the concern was that the government wasn't going to allow for any price increases for verisign. that's why the stock pulled back. in the wake of the number, reassessing the situation, the company on track for good revenue growth and as a result we have seen a turn-around in today's session, up more than 6%. back to you. >> ocekay, thanks mary. fitch is out with its latest ratings on u.s. states.

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a big bear makes another big call. adam parker on the markets in 2013. and dell's best day of the year. what's the right play now? two traders, one heated debate at the top of the hour. carl, see you at 12:00. >> scully and parker, good hour. can't wait. thanks, scott. 21 days until christmas and ebay seeing a huge surge in mobile shopping. question is, is mcommerce now as they call it the way of the future? steve yankovich joins us. >> thanks for having me here. >> some of the percentage increases are hard to believe. how sustainable are these numbers? are we still in early days? >> yeah, we are. the mobile growth has been phenomenal. if you think about four years back, people didn't think about mobile commerce at all. and now today we expect to do $10 billion in globally on ebay mobile and it's about the consumer. when and where do they want to shop?

and the smartphone is changing the game. we're in a paradigm shift in how people are shopping these days. >> i read that the biggest mobile day for you guys was not black friday, wasn't cybermonday. it was the sunday before cybermonday. >> it started on thanksgiving where we had more than twice the amount of shopping on that thursday, and when -- so we book ended that sunday with thanksgiving and with cybermonday. and the reason is, you think about sunday, this is when we have all of the time in the world. it's a day of relaxation. but that smartphone is with us from the time we get up to the time we go to sleep. and holiday inspiration is happening during that holiday weekend when we're with family and friends, thinking about gifts. and so we put the power, right, of what i want and what i want to buy now in the hand when it's peaked interest, desire, demand, impulse is at its peak. and that is key to mobile shopping. >> interest point. on that front, steve, i'm trying

to lead investors to some derivative plays here. without asking you to talk about competitors, necessarily. but is there something about shopping on a mobile device that leads you to a different category more often than another? >> no. actually, you know, our business is so big that the types of products that people are buying -- the same as they buy online on their computer or popular in the store. it's just about convenience, right? we're just allowing the consumer when and where it matters to them. it's not on the retailer's time, not on the e commerce site's time when they're at a computer. it's when does it matter to you? when do you have moments to act on impulse or your need? and so it's across the board. it's everything from small value items to, you know, six-figure cars are being bought on ebay mobile every day. >> wow. that's -- that talk about an impulse purchase. obviously, we're going to track it through the holidays steve, but appreciate your insight. good to have you. >> you bet. thanks for having me. >> steve yankovi ch for ebay.

going over the fiscal cliff could cause major problems for state economies. which face the biggest threat from the potential tax hikes? joining us on the phone is laura porter, managing director at the public finance department, sector head for the state ratings group which focuses on state credits across the country. and focuses on a report, laura, looking granularly at this. good morning. >> good morning. thanks for having me. >> in general, you argue that a lot of ratings on the state front will remain unchanged no matter what. why is that? >> we feel states are fundamentally very strong credits, have strong control over their revenues and spending and the vast majority have shown the ability and willingness to adjust. so we think that the biggest and immediate threat is the fiscal cliff and what that can mean for state revenues, which quickly react to changing economy. >> you make the point -- surprise to no one, you have an unusually high degree of uncertainty in this outlook and

that's because -- walk us through a scenario. we go over the cliff, and we begin seeing materially lower revenues almost immediately. >> yeah, you have personal income and sales taxes. and that shows that -- when you have the economy declining unexpectedly, you see that show up quickly. most states this year are expecting continued slow revenue growth. so to the extent revenue under perform, you see budget gaps and the three things you want to look at there, in terms most affected, how volatile are the revenues, what are their assumptions, and what potential flexibility they have in terms of reserves. >> yeah. i'm looking at a list of the ratings here. most are triple to aa. but there is your occasional illinois single a. california single a minus. i'm guessing those with lower ratings are more vulnerable than others, right? >> that's the right assessment. it's the ratings indicate a financial flexibility. so in illinois and california,

they are our lowest ratings for states. >> so from your standpoint on january 31st, if it looks like this is really going to happen, and i mean that in a bad way, is the -- would we expect from you and your competitors a change in the rating outlook, or would we be looking at ratings changes outright in the near-term? >> for us, the focus would not be a specific date. it would be how the economy is reacting. and generally, you would be looking at trends generally. you would have outlooks change before ratings would change. >> right. finally, there's the issue of federal medicaid cuts. is that -- i mean, put that on the spectrum of things we need to pay attention to. >> it is -- for states in a whole birvet ballpark in terms of its importance. almost half the money from the federal government that goes to states for medicaid, also medicaid is the program states have been struggling with the most in terms of containing the rate of growth. so really, that's the thing to keep an eye on, on the federal level in terms of how it relates to the states when you're talking about spending cuts. >> yeah. everyone wants to pretend it's

simply a federal story, the cliff, that is, but clearly it is a lot more to it than that. laura, thank you so much for your time. >> thank you very much. >> laura porter joining us from fitch this morning. chances are if you're watching this now, your car is sitting somewhere idle. what if i told you could be making money on that car right now? that's exactly what car sharing start-up getaround does. we'll show how they do business when we talk to the ceo in just a minute. [ male announcer ] it's that time of year again. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. start saving at citi.com/pricerewind.

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can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. take you to a live shot of central london. if you are anywhere near twitter this morning, you are aware now that kate middleton is pregnant. some people reporting continual

in the early stages, obviously. this is of a live view of king edward vii hospital where we believe kate middleton has been for several days, according to the castle, due to early morning sickness. for more details on that, guaranteed it's coming your way. in the meantime, talk for "squawk on the tweet." we have been talking about that study by the carlisle and gallagher consulting group saying 1 in 3 americans would consider a mortgage from walmart and half from paypal. neither offer mortgages. suppose walmart does enter the business? complete this sentence. walmart offering mortgages is like banks offering what? robert writes, it's like banks offering walmart greeter as a financial adviser, free of charge. bubbles writes walmart offering mortgages is like banks opening on thanksgiving night. and kerry writes, ugly christmas sweaters, which might be a gift if you open the new -- a new checking account. dow down 9 points. dell